The Ministry of Labour and Employment has issued Notification S.O. 2698(E), dated 29 May 2026, specifying simple interest at 12% per annum on amounts due from employers under the Code on Social Security, 2020.
Issued under Section 127 of the Code, the notification provides that interest runs from the date an amount becomes due until the date of its actual payment. It expressly takes deemed effect from 21 November 2025.
For employers, the practical implication is clear: delays in paying covered statutory dues can create an additional interest liability, even where the principal amount is subsequently paid.
Particulars | Details |
|---|---|
Issuing authority | Ministry of Labour and Employment, Government of India |
Notification | S.O. 2698(E) |
Notification date | 29 May 2026 |
Governing provision | Section 127, Code on Social Security, 2020 |
Interest rate | 12% per annum |
Nature of interest | Simple interest |
Calculation period | From the date the amount becomes due until actual payment |
Deemed effective date | 21 November 2025 |
The effective date requires attention. Although the notification was issued in May 2026, its operation is expressly linked to 21 November 2025. Employers should therefore review relevant delayed payments from that date, including cases where the principal dues have already been cleared but the associated interest remains unreconciled.
The notification does not prescribe a new payment deadline or grant an additional grace period. The due date must be identified under the provision governing the particular liability.
Section 127 also contains an important qualification: it applies except where the Code expressly provides otherwise. Consequently, the notified rate should be applied after checking the provision governing the amount concerned. A separate statutory treatment of interest cannot be disregarded merely because this general notification has been issued.
To understand the financial impact, consider an illustrative case in which ₹2,00,000 remains unpaid for 30 days after becoming due. Assuming Section 127 applies and using a 365-day year:
Interest = ₹2,00,000 × 12% × 30 ÷ 365 = approximately ₹1,972.60
This illustration explains the calculation only. The actual amount will depend on the legally applicable due date, payment date, outstanding balance and relevant calculation requirements.
The notification concerns interest. It does not state that payment of interest settles every consequence of default or provides immunity from other applicable proceedings. Any separate damages or penalty exposure must be examined under the relevant provisions.
As a practical compliance measure, employers should:
Reconcile statutory dues with payment records and bank confirmations.
Identify delayed or short payments relevant to the period beginning 21 November 2025.
Check the applicable legal provision and due date for each liability.
Calculate and reconcile interest separately from the principal dues.
Retain supporting workings and payment evidence for audit and inspection.
Assign clear responsibility for approving and completing remittances before their due dates.
For HR, payroll and finance teams, this notification makes timely payment and accurate reconciliation especially important. Internal records should capture both the amount payable and the actual payment date so that any interest exposure can be identified and addressed promptly.
Notification reference: S.O. 2698(E), dated 29 May 2026; Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii); Gazette ID CG-DL-E-30052026-272998.